Groupspaces – how to screw over your userbase even while you still earn thousands a month [Startup Fail]

The global web industry constantly slaps itself on the back for being jolly clever with all these new apps and services, and every time a new startup picks up a big dollop of VC money it’s splashed all over the likes of Techcrunch and Hacker News. But what doesn’t make news a lot of the time is what happens when the startup falls apart, either through lack of ‘traction’ or a basic cashflow problem.

The problem is acute when the startup doesn’t die completely (as in Deadpool dead), but instead continues to limp along, ignored by founders, investors and anyone else who used to be champions. A situation which is made exponentially worse when nobody inside the organization can be bothered to let users know what’s going on.

This is currently the situation with Groupspaces, a service which was founded in 2007 by two Oxford University college friends, Andy Young and David Langer, offering easy to manage online email lists and groups for Joe Public. The service was designed to be simple to use, and certainly it impressed enough people to grab $1.3 million in investment from some serious financial players fairly early on. By mid 2012 it boasted of having 3 million group memberships in over 100 countries.

But it appears that’s when the problems began, and now fast forwarding to January 2014, the company seems to be drifting like the Mary Celeste, bereft of crew and captain, while still raking in monthly subscription fees from poor unknowing users.

A key moment seems to have been when the last of the founders, Andy Young, jumped ship last April to join Stripe UK. With the kind of sang-froid that would make any unrepentant teenager blush, he proudly declared that the service would continue to run ‘nicely as a sustainable small business’, which basically appears to mean ‘I’m off Jack, last one out don’t forget to turn off the lights’.

The site currently hosts an indeterminate number of users, many of whom have been clamoring for months for some sort of customer support, pleas which have been completely ignored by whoever is helping to run this ‘sustainable small business’ in its London HQ. The phone number given on the site rings out, the address appears to be a post box type accommodation address, and there’s no sign of any personnel anywhere to help users solve their problem.

And the problem is acute. This email management service has started refusing to let users send emails, which indicates a fundamentally broken mail list system. But not a hint of a explanation has emerged from the company itself. As user Paul Christensen aptly laments on the above Techcrunch post about Young’s departure.

“So “putting it on auto-pilot” with no customer support and no development is fine as a sort of modus operandi for you guys is it?….There is, as far as I can tell, absolutely no-one working for Groupspaces now, yet someone is basically taking tens of thousands of pounds each month in the fees that are now being extracted from customers under false pretences…Frankly, I think this is criminal…”

To say that this kind of treatment is abhorrent is an understatement. Either you wrap something up and call it a day, or you sell, partner or sort out your issues so the user is not left in the lurch. Every time a startup does this to its customer base a whole constituency of online users is left with a bitter taste in the mouth, which will eventually result in people simply not trusting ANY online service which is not owned by a huge brand. A potential disaster for startups in the future.

A good part of the blame must also rest with Index Ventures and the rest of the investors in the company who, having decided there’s nothing worthwhile in a ‘small business’ of this type, have no doubt simply scrubbed all mention of it from their books and blithely moved on to hunt for more ‘scaleable’ fodder. It’s no wonder they call VCs vultures. Surely they should be at least partly instrumental in helping secure or close a business when its time has come?

Meanwhile the growing chorus of despair from the ignored (and yet still paying) Groupspaces userbase continues to grow, just as the automated response machine churns out the typical robot drivel.

“Thank you for contacting GroupSpaces!
Your message has been added to our Priority Support queue and we will try to respond as soon as possible.”

The whole affair is shoddy and a disgrace to all the parties concerned.

No, there is no fraud because the service is still being provided and it works for a lot of people (obviously) otherwise we’d see more complaints. The fact is it’s still providing what people pay for, otherwise they would stop paying. It’s a tricky grey area when you have a system that’s so well written that it doesn’t need much maintenance. It’s just when edge cases break that the problems happen. The issue here really is one of ethics really, isn’t it? You should tell your customers what’s going on, and make sure you at least maintain a skeleton staff of some sort to be fair. Or shut down completely?

Paul Christensen

Surely the fact that they are taking my money for “Premium Service” which explicitly includes “Priority” customer support when then appear to have no intention of providing any such support at all is fraud isn’t it?

I’m in Hong Kong, so trying to track these people down in person is a bit tricky.

And the problem is, as you say, that the underlying service basically continues to work (and someone is obviously doing some maintenance when things break), and that there really doesn’t seem to be any comparable service out there for many people’s uses of it (which for me is running an amateur hiking group – event management essentially with no money involved: I pay the Groupspaces subscription out of my own pocket).

Yes Paul, I know exactly what you mean. If it’s any consolation, I had an email chat with the ex founder Andy Young recently, and he’s trying to get things on an even keel, but the problem is the service is not generating enough revenue at the moment. So that’s where the problem lies I suspect. The truly bad thing is the fact that they won’t even talk to the paying customers and let them know what’s going on, hence the ‘ghost ship’ feel.
Here’s his comment:

”
I regret that in the last few months we’ve been unable to cover many support questions, although I’m glad that we managed to keep GroupSpaces operating to provide the service to the existing users and anyone else who finds it useful, rather than having to shut it down as happens to countless other websites that fail to succeed at making a profit.

GroupSpaces has been operating essentially as a non-profit recently, with no money taken out of the business – half of the income covers the hosting and operating costs, and the other half is being saved within the business to ensure it’s future stability and rebuild the coffers so we can bring on another person or two to ensure support can be covered appropriately moving forward. I’ve personally been working in an unpaid capacity, and I’m hopeful that we’ll have additional support capacity in place soon.”

Paul Christensen

Thanks for that. If only he’d say something like that to the paying customers, explaining the situation and what his plans are, then he could generate quite some amount of goodwill. At the moment he’s just got an increasingly irritated customer base (many of whom are uncomfortable because they feel “locked in” to his platform, so don’t want to make too much fuss). But revenue must be declining as people move away, so if he doesn’t get support sorted out soon I’d have thought it would be past the point of no return.

Yes, it’s a real shame, especially since the service is actually pretty awesome. Perhaps a few of the users ought to get together and try to do a crowd-funding exercise to offer to take a chunk of the business? Make it a kind of co-op? I’m sure they’d listen if there was money involved. He can always be found via Twitter.

Yes, it’s a real shame, especially since the service is actually pretty awesome. Perhaps a few of the users ought to get together and try to do a crowd-funding exercise to offer to take a chunk of the business? Make it a kind of co-op? I’m sure they’d listen if there was money involved. He can always be found via Twitter.

Yes, it’s a real shame, especially since the service is actually pretty awesome. Perhaps a few of the users ought to get together and try to do a crowd-funding exercise to offer to take a chunk of the business? Make it a kind of co-op? I’m sure they’d listen if there was money involved. He can always be found via Twitter.

Yes, it’s a real shame, especially since the service is actually pretty awesome. Perhaps a few of the users ought to get together and try to do a crowd-funding exercise to offer to take a chunk of the business? Make it a kind of co-op? I’m sure they’d listen if there was money involved. He can always be found via Twitter.